A plan net position is directly tied to the employer's net pension liability. The CAFR of North Orange included the statement of fiduciary net position for its employee pension plan presented here:
North Orange Employee Pension Plan Statement of Fiduciary
Net Position June 3, 2018
(Dollar amounts in thousands)
Assets
Cash and cash equivalents............................................ $ 140,279
Receivables:
Contributions............................................................... 13,285
Investment income......................................................... 8,100
Total receivables.......................................................... 21,385
Investments:
Fixed income securities................................................ 1,111,088
Domestic equity securities............................................. 2,345,543
International equities..................................................... 870,240
Real estate.................................................................. 511,112
Total investments........................................................ 4,837,983
Total assets............................................................... 4,999,647
Liabilities
Investment fees payable...................................................... 2,890
Due to broker for investments purchase................................. 230,555
Benefits payable to retirees................................................. 59,231
Total liabilities............................................................. 292,676
Net position restricted for pensions.................................. $4,706,971
1. A note to the statement indicated that the plan net position was 75 percent of the North Orange (the employer) total pension liability. From this limited amount of information, can you tell how much North Orange would report as its net pension liability?
2. In light of your response to question #1, how do you explain that benefits payable to retirees are only $59,231?
3. Suppose the city reduced its discount rate from 7.75% to 7.50%. How would that reduction affect the pension plan's net position?
4. Suppose the city were to sell common stock for $1,500,000 that it had acquired for $1,000,000. How would such a sale affect the pension liability as reported on the balance sheet of North Orange?